Denair man charged with embezzlement from Modesto car dealership

A Denair man was arrested Wednesday on suspicion of embezzling nearly $300,000 from American Chevrolet in Modesto.

Michael Badiou, 55, was arrested on suspicion of embezzlement and forgery and faces an enhancement for embezzling more than $200,000.

He was a vehicle wholesaler who supplied American Chevrolet with used vehicles to sell on the lot and sold customer trade-in vehicles at auction and to other dealerships, according to court documents.

Badiou is being charged with embezzling 22 vehicles in the amount of $298,760 from March 2012 to January 2013. He sold them without paying American Chevrolet its share, authorities said.

The actual number of cars and the amount embezzled could be more. In March, U.S. Bankruptcy Judge Ronald Sargis ordered Badiou to pay American Chevrolet’s insurance company $349,899, the amount it reimbursed the car dealership for nonpayment on 34 vehicles sold by Badiou, according to court documents.

In May 2013, Badiou and his wife filed for Chapter 7 bankruptcy protection. According to attorneys for American Chevrolet and its insurance company, Sentry Select Insurance, Badiou was in debt to the dealership for at least $608,965.

American Chevrolet President David Halvorson said Wednesday that Badiou was a good friend of his brother, Vice President James Halvorson, and they both knew him for many years before engaging in a business relationship.

“There is some blame (on my part) as far and being overly trusting and naive,” he said.

The brothers met with Badiou after he fell behind on payments to American Chevrolet. He told them he was getting a loan from his mother-in-law that would help him pay off his debt.

Instead, Badiou began concealing his thefts by fraudulently coding vehicles in American Chevrolet’s computer system so that they would not appear on vehicle management reports, according to court documents. “Badiou then sold the vehicles and kept the proceeds for himself,” the document reads.

In additional to the $350,000 in actual damages, Sargis ordered Badiou to pay Sentry Select Insurance $50,000 in punitive damages, plus attorneys’ fees. His remaining debt to American Chevrolet also stands.

David Halvorson discovered the discrepancies while preparing tax information in January 2013 and cut ties with Badiou then.

The Stanislaus County District Attorney’s Office began investigating the case at that time. Halvorson credits investigators with doing an “extremely thorough” job bringing charges against Badiou.

Badiou is being held on $250,000 bail. He will be arraigned on Friday in Department 12 of the Stanislaus County Superior Court.

Investigators ask anyone with information on Michael Badiou or related to the case to contact D.A. investigator Rich Delgado at 209-525-6929.

This story was originally published December 2, 2015 at 3:57 PM with the headline "Denair man charged with embezzlement from Modesto car dealership."